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California Mandated That Corporate Boards Must Be Diverse; Conservative Legal Group Just Got Court To Rule Landmark Law Unconstitutional

Just last month, California Gov. Gavin Newsom declared that it was important for minorities to have a voice on the boards of powerful corporations. The state passed a law in 2020 mandating that corporate boards had to have diverse members. But on April 1, a Los Angeles judge ruled that California’s landmark law mandating that corporate boards have ethnic or LGBT members violates the state Constitution.

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Conservative legal group Judicial Watch went to court seeking a permanent injunction against the measure. Judicial Watch’s lawsuit argued that the measure that was signed into law in 2020, was illegal since it was against the law to use taxpayer funds to enforce a law that violates the equal protection clause of the California Constitution by mandating a quota based on race, ethnicity, sexual preference and transgender status, The Hill reported. And a court has agreed. 

The measure had required corporate boards of publicly traded companies with a main executive office in California to have a member from an “underrepresented community,” including LGBT, Black, Latino, Asian, Native American or Pacific Islander. Corporations were required to include at least one member of an underrepresented community on their boards of directors by the end of 2021, either by adding a seat or filling a vacant one, The Los Angeles Times reported.

The measure requires at least two such directors by the end of 2022, on boards with four to nine directors. Three directors are required for larger boards. Firms that don’t comply could face fines of $100,000 for first violations and $300,000 for repeated violations.

A “Diversity on Boards” report issued in March by California’a secretary of state found that about 300 out of some 700 corporations had increased diversity.

The decision “declared unconstitutional one of the most blatant and significant attacks in the modern era on constitutional prohibitions against discrimination,” Judicial Watch president Tom Fitton said in a statement.

The state, however, argued that the measure didn’t “discriminate against, or grant preferential treatment to, any individual or group based on race, sex, color, ethnicity, or national origin in the operation of public employment, public education, or public contracting.”

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